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Higher crop prices suggest increase to Grain Indemnity Program fund needed
The Ohio Grain Indemnity Program was established in 1983 to protect farmers’ interests should the local elevator go bankrupt or fail. Farmers are reimbursed 100 percent for grain stored at the elevator. Delayed price and basis transactions are reimbursed 100 percent of the first $10,000 of the loss and 80 percent of the remainder.
Currently the indemnity fund is statutorily capped at $10 million, but since the last fund cap, corn prices have increased approximately 225 percent, soybeans increased 147 percent and wheat increased 191 percent. Ohio Farm Bureau supports Senate Bill 66 which would make several changes to Ohio’s indemnity program, including an increase in the fund cap to $15 million. The bill has passed a Senate floor vote and is now headed to the House Agriculture committee.
Ohio Farm Bureau Director of State Policy Brandon Kern testified to the Senate Agriculture Committee on behalf of Farm Bureau members.
“Considering the impact the failure of a grain elevator could have on farmers at current prices, OFBF believes increasing the grain indemnity fund cap is a reasonable approach at this time,” he said. “In addition to increasing the fund cap, Ohio Farm Bureau firmly supports changes in the bill that would ensure producers’ claims are honored in full based on when their grain is priced rather than if it is priced on delivery.”
Kern told the committee Farm Bureau members’ concerns about ensuring farmers’ claims are honored in full based on price and not delivery are a result of the failure of Archbold Grain and the reduction in the claims of some farmers who had delayed pricing contracts with the elevator.
An Ohio Department of Agriculture (ODA) analysis estimated that middle third commodity handlers, essentially mid-sized grain elevators, take in a gross dollar average of $13,599,572 worth of product a year, an amount that could be covered by the increase to $15 million in the fund.
Some interested parties have advocated for a comprehensive review of the program and for exploring new ways to fund such a program. Kern explained that Farm Bureau also encourages a comprehensive review of the program and exploration of new ways to fund the program.
“We encourage this review and would hope that lawmakers and the Department of Agriculture will work with us to that end,” he said. “We believe this should include long-term considerations about how the fund is administered.”